Do Changes to Net Metering Policy Mean the End of Residential Solar?

The widening adoption of residential solar is upending the hundred-year-old utility business model. Helped along by laws that find a balance between consumers’ and utilities’ needs, some utilities are embracing this change. But, some aren’t.

For those utilities fighting against residential solar, their argument focuses on something called net metering. Solar systems produce energy whenever sunlight hits the panels. Sometimes that energy is produced and it can’t all be used in the home. When this happens, the energy is sent onto the electrical grid to help power other homes and businesses. Net metering is when you, as a person with a solar system on your roof, are credited for the energy you send onto the grid. Essentially, net metering means that residential solar systems are miniature power plants providing clean, safe energy for others to use.

The argument made against net metering is that it lowers bills for solar-powered homes, shifting power infrastructure costs to non-solar customers. In Nevada, this argument was effective in changing the rules around net metering for a period of time and solar growth essentially stopped in the state. This led some analysts to believe that the end of net metering will mean the end of residential solar.

But it’s not clear that net metering is ending.

The overall benefits of net metering

Despite the grim picture some utilities paint of net metering, many studies have found that it’s not just homeowners with solar systems seeing benefits from net metering programs, but everyone using the grid in that region. Consider, for example, the following:

  • A recent study conducted in California, the state that generates the most solar power in the U.S., found that the current net metering program generates benefits for all residents in the state and did not create any additional costs for ratepayers who did not have solar systems.
  • Researchers in Missouri conducted a cost-benefit study of net metering and discovered the program benefits every customer, regardless of whether they have their own solar systems. Although the study's authors did not quantify the net effect of net metering, they concluded that it is positive.
  • The Environment Massachusetts Research and Policy Center conducted a review of 11 recent analyses of net metering in the state. The Center found that these programs deliver greater benefits to the grid and society through avoided energy costs and investments, reduced financial risks and electricity prices, increased grid resiliency, a decrease in harmful pollution and a boost in the local economy through more jobs.

Importantly, Nevada, which ended its net metering program in January 2016, is reversing course. The public utility commission grandfathered more than 30,000 solar customers who had solar before the change to net metering. And, the governor’s Energy Task Force has recommended that the state bring back net metering to all solar customers, present and future.

The Brookings Institution notes that regulators in at least 10 states have conducted reviews of their net metering programs and found that net metering benefits all utility customers. As studies continue to show the benefits of net metering, we believe this program will only continue to grow in popularity